Oregon Average falls to $1.80; National Average drops below $1.70

Gas prices continue to drop like a rock, with the national average reaching its lowest point since March 2004, and Oregon's average falling to levels we last saw in January 2005.

This week's prices in Salem dropped below $1.70 Salem-News.com photo by Bonnie King

(PORTLAND, Ore.) - The national average hasn't been this low since March 1st, 2004 when it was $1.69 a gallon. Regular unleaded fell 11 cents in the past week to just under $1.70. Oregon's average is the lowest it's been since January 2005. It drops 12 cents this week to $1.80, says AAA Oregon Public Affairs Director Marie Dodds.

"Both averages are more than $2.40 a gallon lower than the record highs of more than $4 a gallon set in July. That's a decline of about 58% in just five months."

The price of crude oil has fallen more than $100 per barrel since setting the record high of $147 per barrel on July 11, 2008. Today crude is trading at about $43 per barrel, after dropping to $40.81 last Friday. Dodds says, "The steep decline in crude prices is because of the faltering global economy and the resulting soft demand for fuel in the coming months."

The Energy Department today predicts global oil consumption will drop by 500,000 barrels a day in 2008 and by 450,000 barrels a day in 2009. This would be the first time since the early 1980's that world consumption would decline for two consecutive years. Even so, the government agency predicts an average gas price for 2009 of $2.03 per gallon, and an average oil price of $51 per barrel.

Dodds says, "AAA believes we won't have a really good sense of where prices will go in 2009 until next March. This is when we typically see a seasonal upturn in gasoline prices as refineries begin to process summer fuels and oil demand tends to pick up." Dodds adds it's possible prices might move higher next year in response to an improving economy, further cuts in oil production (which OPEC may make at its Dec. 17 meeting), and reduced refinery output, which we are already seeing.

Portland has the lowest average for gas at this time, with motorists paying $1.766 at the pump. Salem drivers are seeing an average of $1.773 for regular. The Eugene/Springfield area follows closely with an averalge of $1.799. Medford/Ashland prices are notably higher, with an average cost of $1.918 for a gallon of gas. Self-serve regular in Vancouver, Washington is going for an average of $1.883.

Only three states still have averages for regular unleaded at or above $2 a gallon. The most expensive gas in the country for the 24th week in a row is Alaska at $2.71, followed by Hawaii at $2.53, New York at $2.05, Connecticut at $1.88 and District of Columbia at $1.87. Oregon's gas prices are 12th highest, up from 13th last week. Washington is 11th highest for the second week in a row, with its statewide average falling ten cents to $1.83. Missouri has the least expensive gas in the country for the fifth week in a row at $1.48.

Diesel prices also continue to drop. Oregon's average falls 13 cents this week to $2.64, while the national average loses 12 cents to $2.63. Hawaii has the highest statewide average price for diesel again this week at $4.12, followed by Alaska at $3.77, New York at $3.14, District of Columbia at $3.14, and Connecticut at $2.99. Oregon's average diesel price is 24th most expensive this week, down from 22nd last week. Washington's diesel price is $2.65 which is 23rd highest, down from 14th last week. A year ago, the national average for diesel was $3.43 and Oregon's average was $3.47.

Source: Oregon AAA